As we continue on with Tax Week at Cutting for Business, we are going to look at a list of common tax deductions in your Silhouette or Cricut business. Catch up with other tax related posts here. Tax deductions are expenses that your business has encountered throughout the year. You use deductions to reduce the taxable income that your business has had throughout the year – thus allowing you to pay less in taxes at the end of the year.
Two Kinds of Deductions
For some deductions, you take the entire value of the deduction at one time; while others you take a portion of the deduction over several years. For example, you may take a deduction of $40 for vinyl you recently purchased. However, since you will continue to use your machine throughout several years, your machine depreciates and you take smaller deductions over the useful life of your machine.
Common Tax Deductions in Your Silhouette or Cricut Business
- Supplies (vinyl, paper, glue, transfer tape, weeding tools, blank products)
- Machines (your Cameo, Curio, Mint, Cricut, heat press, postage scale or printer, computer you purchased for business use, or camera and related photography equipment)
- Software like Silhouette Designer or Business Edition Upgrade, fonts, designs
- Books to improve your skills (Diving In: 30 Days to Your Silhouette Business – shameless plug to book!)
- Business insurance
- Event entry fees from craft shows or fairs
- Home office overhead (space in your home, internet, electricity, water)
- Legal fees (attorney fees from setting up your business, trademarking your designs, registering copyrights)
- General office supplies you use in your business (envelopes, tape, pens, pencils, tacks, staples, file folders, etc)
- Postage and shipping supplies (boxes, envelopes, tape, packing peanuts, bubble wrap, labels, etc)
- Advertising Expenses (promoted listings on Etsy, Pinterest, Facebook, Google Adwords, and print materials including business cards or post cards)
- Tax preparation expenses
- Accounting expenses (monthly accounting subscription, or the costs related with hiring an accountant)
- Phone expenses (cell phone bills, phone)
- Travel expenses related to your business (gas, lodging, food)
- Start up costs – up to $5,000
- Credit card processing fees
- Display materials and photography props
- Charitable donations (including product donations for fundraisers)
- Health insurance premiums
- Childcare expenses (from when you are working in your business)
- …most things that you have purchased for use in your business can be taken as a tax deduction.
Whew, that’s a lot of deductions! When taking deductions related to your Silhouette or Cricut business, the IRS will not ask for copies of each receipt. However, you are required to keep your receipts on file. Read on as I wrap up Tax Week with a checklist to help you get organized to file your small business taxes.